The Marketing Mix
Marketing Mix
• The blend of the four marketing
elements of product, place
(distribution), price and promotion
Product
• Product Mix: The different products and services a business offers
• Two Aspects to Consider:
– Selecting Product Features
• Color, size, quality, hours of operation, warranties, delivery, and
installation
– Branding, Packaging, and Labeling
• Branding: the name, symbol, or design used to identify the
product
• Package: the box, container, or wrapper in which the product
is placed
• Label: information about the product on the package
Positioning
• Placing a product in a certain market to get a
desired customer response
• What are the differences between a Hyundai
and a Jaguar?
Place (Distribution)
• Channels of Distribution: the routes that
products and services take from the time they
are produced to the time they are consumed
• Aspects to consider:
– Getting the product in a timely manner
– Channels of distribution usually result in lower
costs than trying to do everything yourself
– Channels save time for buyers and sellers
Channel of Distribution for Retail Goods
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Cotton fields/farmers (Raw Materials)
Textile Mills
Manufacturer
Wholesalers
Retailer
Consumers
Channel of Distribution for Retail Goods
• Stay open in evening hours and on weekends
• Use catalogs, fliers, other advertisements to
reach customers outside living area
• Take orders by phone, fax, or ship directly
Distribution through Internet
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Websites
On-line Catalogs
ebay
On-line Auctions
Channels for Service Businesses
• Single direct channel from entrepreneur to
customer
• Product and consumption happens at the
same time
• Some services utilize retailers to distribute
their product (film developers)
Channels for Manufacturing
• End customers are generally NOT the
customer for manufacturing
• Broad distribution or narrow distribution
Physical Distribution
• How is the product transported?
• How is product stored?
• Transportation:
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Air
Train
Transfer truck
Pipeline
Ship
Combination of methods
Physical Distribution
• How is the product transported?
• How is product stored?
• Storage and Handling Options:
– Warehouses
– Packages must protect the product from
production to sale
Price
• Set Your Price Objectives:
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Maximize sales?
Increase profits?
Discourage competition?
Attract customers?
Maintain an image?
Return on Investment
• One pricing strategy is to determine cost
involved and then decide how much you
desire to gain as a return on your
investment
Obtaining Market Share
• Market share: percentage of total sales by all
companies in the market that a business
captures
• Pricing strategy that gains market share will
either be a lower price than competition or a
comparable price for a higher quality product
Determining Price
• Demand-Based Pricing: price set by how
much the customer will pay
• Cost-Based Pricing: determining wholesale
cost and placing a markup amount on the
price
– Markup: amount added to the wholesale price
– Markdown: amount subtracted from the retail
price
Determining Price
• Competition-Based Pricing: price
determined by what the competition is
charging for the same good or service
Service Pricing
• Time-Based Pricing: hourly rate for a service
performed
• Bundling: services are bundled together and
sold at a discounted price
• Breakeven Point: all costs for a service are
added to determine the lowest price a service
may be sold at in order to cover costs (the point
where sales revenues equal production cost)